3 Ways Red Tape Could Ground Private Space

The nation has never seen anything like the nascent private space industry. There are laws and regulations that could keep spaceflight safe or smother entrepreneurial firms and industries in their cradles.

Spaceflight is an exciting business: There are powerful rockets, inspiring missions, and radically new spacecraft. But that excitement gets buried in layers of laws, regulations, and oversight that determine how Americans can get themselves off the planet. It's not glamorous, but it's important.

Today, private companies want to kick-start a new industry, one that would carry astronauts and ordinary citizens to the edge of space, into orbit, and into the solar system. But government rules are not keeping up with the 21st-century space industry, and the federal bureaucracy is not keeping up with their ambitions. Here are three places where the D.C. rulemakers could make or break the future of American spaceflight.

Should the FAA Be in Charge?

Officials within the Federal Aviation Administration are not shy about their desire to claim oversight over spacecraft. The FAA already controls the flight licenses that capsules and space planes must have for their launches and landings and makes sure payloads comply with regulations, but no one in the federal government is tasked with regulating in-orbit safety. "It is time to consider closing the current regulatory and safety gap between launch and reentry," George Nield, the FAA's Associate Administrator for Commercial Space Transportation, told Congress this week. Nield cited "the FAA experience with collision avoidance" as a reason the agency should receive "exclusive authority" over orbital spacecraft safety. Then he broke down the issue so that even a member of Congress could understand the issue: "As the popular film Gravity depicts, collisions in space can have devastating effects."

Safety is important, of course, but the FAA may not be the most efficient place for oversight. Consider the case of Virgin Galactic, which is fast approaching a Catch-22 in its effort to create a spacecraft to bring tourists to suborbital space. Virgin has an FAA experimental permit to develop the spacecraft. But to make money from paying customers, Virgin Galactic must obtain an FAA commercial operator's license. Here's the catch: The company can't make changes to the design of the craft once it gets that commercial license and starts flying customers. Nield says the company can obtain a separate launch license for its testing, "but under current law you can't go back and forth."

This is an example of how paperwork can drive engineers crazy by keeping needed improvements from making their way into flight-ready spacecraft. "We never intended a company's ability to test vehicles and gather safety info to be limited because an license has been approved," says Rep. Dana Rohrabacher, who served as chairman of the Subcommittee on Space and Aeronautics in 2004 when the Commercial Space Launch Act (CSLA), which governs the FAA's oversight, was changed to include private space operations.

Can One Office Handle It?

The space industry is going places, like the moon and asteroids, that the FAA has no experience in governing. In fact, according to Commercial Spaceflight Federation executive director Alex Saltman, "there is no one federal agency with that authority." NASA has the experience in spaceflight, but it is not a regulatory agency.

So the best alternative might be a new regulatory agency. However, Congress asked hard questions this week about the role of an agency that doubles as an advocate and a regulator. Right now, the FAA's Office of Commercial Space Transportation promotes private space and regulates it, but that sort of relationship leads people to wonder if the industry is influencing the government, and if the government is playing politics with the industry. That means we may wind up with two new agencies, one to promote and one to regulate, which could end the dream of a one-stop federal office for private space companies to deal with.

There has never been a time in history with so many companies making so many manned spacecraft, including capsules, space planes, air-launched craft, and those that take off from a runway. That variety presents another problem with issuing requirements for spacecraft. "With different vehicles all regulated by one agency, there could be an issue of some regulations favoring one type over another," Henry Hertzfeld, a research professor of space policy at George Washington University, told Congress. (He added that this has not happened yet.)

After an Accident, Who Pays?

Insurance is a hot-button topic for space operations, even though there have been very few accidents. The potential for a truly catastrophic accident—think of orbiting space debris knocking out satellites, or a rocket crash immolating a spaceport—is staggering.

And it gets even trickier beyond orbit. "At present, Congress has not granted regulatory authority to any agency for most of these newly developed commercial activities that will take place in outer space or on celestial bodies," Hertzfeld says. "Yet issues of safety, international responsibility, and liability will remain with the federal government as mandated by our treaty agreements."

We're already seeing this issue play out in the commercial-satellite launch business, where American companies like SpaceX want into a market currently dominated by Chinese, Russian, and French firms. Those governments have no cap on the amount of indemnification coverage—how much they'd pay after an accident—but the CSLA has a $3 billion cap on a U.S. federal contribution, only activated if the damages exceed $500 million. Such a catastrophe has never happened, which means the rule hasn't been tested, according to Alicia Cackley, who authored a General Accountability Office study and appeared before Congress.

The worry here is that Congress periodically must renew the indemnification rules. If it decided to remove the payment guarantee, that could drive up insurance rates, leading to price increases that would drive customers away. "Launch companies reported that additional costs would be passed along to customers," Cackley's report states. "But whether this increase alone would be sufficient reason for a launch customer to choose a foreign company over a U.S. company is not clear."

Right now, it looks like Congress will approve a three-year extension. Some in Congress say that launch companies should look to insurance companies to band together to establish risk pools. These joint funds could cover the launchers' insurance needs. Nuclear power plants have such mechanisms, but the model may not be appropriate for private space. "This was the right solution for an industry that was making lots of money," Saltman says. "It might be the right solution 20, 30, or 40 years down the road."

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